The Truth about Home Equity Line of Credits
When the time comes for you to take the next step in life when applying for a loan, a Home Equity Line of Credit (HELOC) may not be the right solution. For those of you who are over the age of 55, a reverse mortgage is a better option. Do you know the differences between a reverse mortgage and a HELOC? We gathered important information about both types of accounts to help you with making your decision.
Short and Long Term Goals
Shortly after you take out money from a Home Equity Line of Credit, interest accrues and a payment is immediately due. A short term need for cash makes sense when you have enough money to quickly pay the loan. Seniors that are on a fixed income that need money for long term use, can easily spend over their monthly budget with this type of loan.
With a reverse mortgage, making payments can begin when you officially sell your house. Interest accrues on the balance that is outstanding as your home continues to appreciate. After your house is sold, the debt of the loan is paid off.
The Amount You Can Borrow
A home equity lender that offers a loan may offer up to 80% to borrow from the value of the property but this condition is awarded to seniors that can afford to pay it back. As a result, individuals that are on a fixed income may not be able to access all of the money.
One of the benefits of a reverse mortgage is you can borrow up to 50% of your home’s value which protects the equity of the home. Furthermore, the residual value remains after the loan is completely paid off.
We welcome you to give Texas Senior Lending a call today to find out more about our reverse mortgages. Our qualified financial advisors will sit down and speak with you about your needs to help you achieve your short and long term goals.
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